Netflix and churn, Primark’s reopening and copper mining in focus on Tuesday

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Updates from Primark owner Associated British Foods PLC (LON:ABF) and FTSE 100 miners Rio Tinto and BHP are in the diary for Tuesday, along with the latest UK unemployment numbers.

Across the Atlantic, the US earnings season will see FAANG star Netflix broadcast its numbers after the Wall Street close (see more below), following the likes of Harley Davidson, Johnson & Johnson, Procter & Gamble, Lockheed Martin and Philip Morris International which all report before the opening bell.

Primark reopenings in focus for ABF

AB Foods will unveil half-year results that should not come as a big surprise after the conglomerate issued four trading updates since the full-year results in November.

It has been an intense period for the group, with restrictions severely hampering Christmas trading for its Primark arm, which doesn’t have an e-commerce platform.

In February, the company said closures of the clothing chain’s stores would cause an estimated £1.1bn loss in sales with a £650mln cash burn.

Following phased reopenings in many of its markets, management forecast that 83% of Primark’s retail selling space should be trading by April 26, which could still change as governments around the world continue to make sudden changes to their lockdown rules.

What’s for sure is that the UK’s non-essential shops, including Primark, reopened on April 12, with long queues of customers seen outside a number of them. There is likely to be some comment on that, while investors will also want to hear updates on whether cash burn was as predicted.

ABF’s other divisions of Grocery, Sugar, Agriculture and Ingredients have provided a balancing effect for the group, having received a boost from the stay-home orders but likely to see a drop off as things return to normal.

A full-year dividend of 36p per share is expected, after payments were suspended throughout last year.

Copper in focus for mining giants

Four of the UK’s top listed miners issue updates on Wednesday and the omens look good, with iron ore and copper prices having risen steadily since the start of the year.

Tuesday will see BHP PLC (LON:BHP) announce third quarter production numbers, offering potential for updated full-year guidance, though no financials are likely.

Morgan Stanley reckons copper production will be down 13% on the prior quarter, pointing towards full-year production of 1,565mln tonnes, compared to previous company guidance of 1,510-1,645mt.

Analysts at the bank expect “positive provisional pricing”, especially with copper, and said to look out for update on various projects, including Spence, Jansen, Bass Strait West Barracouta and South Flank, and potentially also an update on the restart of production at Samarco in Brazil.

As for Rio Tinto PLC (LON:RIO), the three things that matter to the stock, Morgan Stanley says, are iron ore, aluminium/alumina and copper.

In this statement, the analysts are looking for updated full-year guidance and news on shipments from Rio’s Western Australia Iron Ore (WAIO) operations and the Oyu Tolgoi mine, plus how developments are progressing on the Mongolian mine’s underground project.

Netflix and churn

Last time Netflix Inc (NASDAQ:NFLX) reported quarterly numbers it revealed how the pandemic had lifted its subscriber numbers above 200mln by the end of last year.

Boosted by coronavirus lockdowns around the world and the streaming group’s ever growing slate of video content, there was a net gain of 8.5mln new subscribers in the fourth quarter of 2020, a jump from the 2.2mln added in the third quarter.

This took the number of new users to 36.6m for the year and drove its total number of customers to 203.7mln.

Investor eyes will be on ‘subs’ again tomorrow, with management eyeing another 6mln newcomers in the first quarter of 2021 but stressing the volatility of growth in a post-COVID-19 environment.

This could make customer ‘churn’ a key number to watch as well, said analysts at UBS, as some customers leave due to more price increases across multiple markets, while the content slate is expected to be weighted to the second half of the year.

“New subscribers mean more cash to create new content, keeping existing subscribers happy and helping recruit new viewers,” said analyst Nicholas Hyett at Hargreaves Lansdown.

“Eventually the group could reach a tipping point where new money outpaces the need for new content and it starts to generate a sustainable flow of genuinely free cash. That would be a landmark moment, marking the start of potentially rapid profit growth and Netflix has suggested it would look to return the extra cash to shareholders through share buybacks. If that’s to happen, there’s a lot riding on 2021.”

Moneysupermarket outlook eyed

With lockdown having kept people at home for most of the last year and for the first months of 2021, demand for travel and car insurance is unlikely to have helped things at comparison site Moneysupermarket.com Group PLC (LON:MONY), which will report a trading update on Tuesday.

In February, the company reported a 24% decline in profits for 2020 as a result of the effects of the pandemic, adding that the outcome for 2021 depends on how quickly the UK economy comes out of lockdown.

With the UK government having since set out a roadmap for easing lockdown, parts of the economy reopening and some movement restrictions being lifted, investors will be looking to see if the firm has managed to get more clarity on its performance for the rest of the year.

Consensus forecasts for underlying earnings in 2021 are currently between £96.4mln to £128.8mln, but reaching the upper end of the consensus range will require strong and rapid recovery in both Money and travel-related channels. As a result, investors will be watching closely to see if the company makes any changes to these predictions.

Unemployment update

Tuesday sees the release of a slew of jobs data and weekly earnings figures and inevitably the focus will be on how hard hit the economy has been hit by the coronavirus (COVID-19).

In February, the claimant count rate was 7.5% while the ILO unemployment rate was 5.0%.

Average weekly earnings in the three months to the end of February were up 4.8% on the prior year, or 4.2% excluding bonus payments.

Significant news scheduled for Tuesday April 20:

Trading announcements: Moneysupermarket.com Group PLC (LON:MONY), Petra Diamonds Ltd (LON:PDL), Avast PLC (LON:AVST), City of London Investment Group PLC (LON:CLIG), Integrafin Holdings PLC (LON:IHP), Jupiter Fund Management PLC (LON:JUP)

FinalsFilta Group Holdings PLC (LON:FLTA), Flowtech Fluidpower PLC (LON:FLO), Card Factory PLC (LON:CARD)

Interims: Associated British Foods PLC (LON:ABF)

Economic data: UK unemployment

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